NATM Blog

Retaining good employees is vital to your success, especially in today’s tight labor market. Not only does turnover impact your bottom line in tangible ways, it has other consequences which also impact your bottom line in the form of productivity, safety and quality. The true cost of turnover has been argued for years. A basic assumption that will put it in perspective is that it cost you 1 ½ times an employee’s annual salary when they decide to leave your organization. If your turnover rate is high, these costs can add up quickly. Keep in mind that not all turnover is bad turnover. There are some employees that may be hurting your organization more than they’re helping.

There are several key areas where you can make a difference when it comes to turnover:

Offer a competitive compensation and benefits package

Hire the right people

Create a positive employee culture

Most people assume money is the prime motivation for staying at an organization; however, statistically speaking, only 12% of employees that leave your organization leave for more money. Although it’s important to be competitive, there are many other things you can do than offer more money.

Let’s start at the beginning. How are your interviewing and selection skills? How about the interviewing and selection skills of your manager? Too often, we are rushed to get a warm body to fill a position that may otherwise go vacant when the previous incumbent leaves. We don’t take the time to make sure that the person we select to fill that position is a good fit for our organization. Consider that organizations have a tendency to hire on skills such as work experience, education and training; but they actually fire employees based on behavior such as not showing up for work, having a bad attitude and the inability to work with a team. Review your hiring systems and make sure interviewers are conducting behavior-based interviews. We need to hire based on behavior because we can typically train for skill but we can’t train someone to have a good work ethic.

Once the right employees are on board, it’s important to invest in them. From the beginning, give them an emotional connection to the organization. During their first days on the job, tell them how the organization was developed or created and why the work they do everyday matters. Put together a well-developed presentation that shows them you care about the message they receive on their very first day. Tell them the history of the organization. Outline all the important policies from the handbook. Tell them who to go to with certain questions or issues. Give an introduction to each of the benefits you offer. Employees often have a lot of questions about their benefits but are too afraid to ask. Give them the opportunity at the very beginning as they’re signing up for their benefits. Develop a one-page quick guide to the benefits offered by the organization but don’t let that be a substitute for your explanation of these benefits. On their first day, have a thought-out plan or agenda that includes the presentation, a tour of the building and any important areas like the break room or cafeteria and lunch with the boss or co-workers. Make sure they feel welcome.

Now that you’ve set the tone, keep it going by showing them you care about the work environment. Above all, make sure your managers are trained on how you want employees to be treated. Too often we make the mistake of promoting someone into a management position that was good at doing the work. Most often the skills to do the work and the skills to manage people are very different but we fail to set them up for success by teaching them how to coach, lead, motivate and most importantly stop behavior that leads to legal issues for the organization. You should have a full management training program for anyone in a management position. Even with prior management experience, you want to make sure they follow the basic principles and values of the organization as they manage your employees. The number one reason employees leave a position is the relationship with their direct supervisor.It's also vital that everyone in your organization is holding employees accountable for their behavior. Star employees are often demotivated when they realize that employees with less than desirable performance are allowed to continue that performance while your star employee is going above and beyond without being differentiated from poor performers. Managers need to understand how to have difficult conversations with employees and when those conversations should result in a tangible consequence or discipline.

When we talk about the work environment, we mean culture. Culture is not something that organizations typically define. It is typically developed over time through leadership behaviors and overall communication (either from managers to employees or among co-workers). What things do you celebrate as an organization (if anything)? What do you reward employees for doing? How do you reward them? Other ideas to help with your overall culture include:

Develop a “shout out” board and let employees use sticky notes to compliment other employees who go above and beyond or use it to post positive feedback from customers

Develop a safety incentive program. Put together a safety committee and empower them to develop a system that really changes behaviors with recognition and incentives.

Create a wellness committee to coordinate wellness activities.

Conduct an employee engagement survey selecting the right questions to help you understand what your employees think about senior leadership, their manager, the work environment, engagement, compensation and benefits.

​As you can see, there are many things you can do to impact employee retention. None of them will be easy. If you treat it like a task to check off your list, you will not make a difference with your implementation. These changes take time and diligence. Make sure you set goals for each potential project and give it the time and attention it deserves.